IRS Owes Businesses Billions in Federal Excise Tax Refunds

Landrum, SC – October 17, 2006 - On August 31, 2006 the IRS announced the standard Federal Excise Tax (FET) refund amounts it will allow individual taxpayers to claim without documentation on their 2006 federal income tax returns. The IRS says it is also considering an estimation method for businesses to use for figuring the tax paid.

Individual taxpayers can claim a standard ‘opt out’ amount offered by the IRS for their FET refund - $30 - $60 based on the number of dependents. Byron Horner, President of the Utility Audit Company, Inc., a company specializing in tax recovery, says that represents only 65% of the actual amount owed based on research using FCC information. At this point however, businesses may only request the actual amount of tax paid and must back up their claim with accurate records and phone bills for the past three years. “For even small businesses with several phone lines and cellular phones, this process required by the IRS will be extremely tedious and time consuming,” Horner stated. “Although the IRS is working on an ‘estimation method’ for businesses to use in lieu of doing the research, if they offer the same 65% to businesses that they’re allowing individuals, businesses will leave billions of dollars on the table,” Horner noted.

Horner, a tax recovery expert with 14 years’ experience in utility and phone audits, estimates that the process of compiling, reviewing and identifying the information required to determine the accurate amount to claim will take an average-sized organization 20 hours or more. “Each telecom carrier identifies FET differently on their bills and some provide no summary of taxes paid, making it very difficult for someone who is not familiar with the various phone bills to find the necessary information,” Horner said. “Making it even more difficult for businesses, the refundable tax is only on long-distance service, not local phone service, meaning the two have to be separated in order to calculate the exact amount of FET they paid and can claim.”

A refund of the three percent tax over the forty-one month period allowed by the IRS results in slightly more than a one-to-one ratio in determining the amount an organization can expect for its refund. For example, if an organization spends an average of $10,000 a month on long-distance service, they can expect a refund of approximately $12,000. “However, if the IRS only offers businesses the same 65% it’s allowing individuals, that amount will only be $7,800.” “Smaller organizations may think it’s not worth the time and hassle to compile the information for a refund the way the IRS has set this process up,” Horner explained. “They need to know that there are tax experts and companies available to review and calculate refunds in a fraction of the time it would take them to do it internally, making sure that they get their all money back from the IRS,” he added.

Horner offers these tips for businesses to claim the full FET refund their business is owed:

1. Start NOW. Businesses need to compile information and prepare documentation now before the hectic tax season arrives and this one-time opportunity is missed. Because of the magnitude of this refund (every business in country is owed this refund), the experts and companies that do this type of work will be inundated after the first of the year. Don’t wait. Make arrangements early to have your refund prepared.

2. Gather Phone Bills. Begin compiling past billing data including all phone records and telecom service bills for the period between February 28, 2003 and August 1, 2006.
Carefully Evaluate Each Bill. The Federal Excise Tax is identified differently on each carrier’s bill. Businesses must separate long-distance and local service federal excise tax, as the refund only applies to FET paid on long-distance service (and cellular service).

3. Recruit Professional Assistance. Contact a tax recovery expert to save you time and ensure that your organization is getting the full tax refund money it is owed by the IRS. Remember to make arrangements now before these professionals become overbooked and your FET refund preparation is delayed due to backlogs.

Utility Audit Company (UAC) specializes in helping organizations, both business and non-profit, recover taxes incorrectly paid as well as identify exemptible taxes and have them immediately stopped on current accounts. As experts in utility and phone taxes, UAC has the knowledge to quickly and effectively prepare FET refund claims and help businesses get the full refund that is legally owed to them by the IRS. For more information and comments on the Federal Excise Tax refund process, visit www.utilityauditco.com or call Byron Horner at (866) 457-4262.